Technomic Forecasts Another Down Year For Foodservice
As Technomic Inc.'s V.P. Joe Pawlak put it as he kicked off the firm's annual Forecast & Outlook Seminar last Wednesday in Chicago, "The bad news is it will be another down year for foodservice; the good news is it won't be as down as much as the past two." The day-long seminar was sponsored for the 38th year by the International Foodservice Manufacturers Association. The seminar was also staged in Newark, N.J., Sept. 17 and Millbrae, Calif., Sept. 25.

The research firm predicts total foodservice-operator sales will shrink another 0.8% in 2010 in current dollars, and with forecast food-away-from home inflation of 1.5%, show a 2.3% real decline. This compares with a brutal estimated nominal decline of 3.8% in current dollars and 6.1% real this year. It's clearly been the worst year for foodservice in most of our lifetimes, Pawlak noted. And next year's predicted numbers are not as bad as '08, which saw an estimated real decline of 3.6%. The firm estimates that by the end of '10, foodservice will have lost a combined 11% of its total real value.

Among Technomic's biggest concerns for the next two years: the employment outlook and the frugality the recession has prompted in consumer behavior, even among higher-income households. Pawlak noted that underemployment, which when added to the current 9.7% unemployment combines to 16.8%, is having a major effect on foodservice spending. A whopping 84% of consumer polled by Technomic indicated they are trying to spend less at restaurants.

The "new climate of frugality" is also worrisome because it may be becoming engrained. The percentage of disposable income going to savings soared to 5.2% in the second quarter this year, pulling growth from consumer spending. Technomic suggests this trend to frugality may be long-term, given the pain the recession has caused so many consumers.

Foodservice is so huge, however, that there are always bright spots. Operators are benefiting from the decline in food costs. With those reductions and other cost-cutting measures, some operators have been able to hold or grow profits despite slumping sales. Unfortunately for suppliers, many are cutting costs by postponing capital expenditures. In the forecast operator survey, 38% of operators reported such cutbacks, compared with 31% last year and only 17% in '07.

A handful of segments are forecast to show positive real growth next year, including colleges and universities (1.5%), schools (0.5%), senior living (2%), military foodservice (2%) and supermarkets (2%). Quick-service restaurants, hospitals and nursing homes and convenience stores are forecast as flat in real terms, which will give them a bit of nominal growth.

For information on Technomic research products and services, go to foodpubs.com or call 312/876-0004.

A Bit Of Hope Peeks Out From NRA Performance Index
The monthly Restaurant Performance Index run by the National Restaurant Association fell again in August, but only 0.2 point, to 97.9. And while the overall RPI has remained short of the 100-point line that marks stabile or flat growth for 22 consecutive months, operators do appear to be a bit more optimistic about things during the next six months.

The Current Situation Index, a component that makes up half to total RPI, fell nearly a point, as restaurant operators responding to the survey reported another tough month for same-store sales and traffic. The same-store sales component dropped 1.9 points; traffic fell 1.5. The labor measure was off 0.6 point. Only the score tracking capital expenditures made during the past three months rose, up 0.4 point.

But all four components of the Expectations Index showed gains in August, and the Expectations Index nudged above the 100 tipping point, signaling growth for only the second time since late '07. The component measuring expected same-store sales in six months rose 0.4 point, and that tracking future business conditions jumped 0.7 point. The future capital expenditure measure also rose 0.7 point.

Get Your Seat For FER's E&S Market Forecast Webinar Nov. 4
Will the new Technomic operator forecast for 2010 influence a revision of the FER equipment and supplies market forecast for 2010? To find out, you'll have to register for the magazine's Forecast Update Webinar.

The presentation will run about an hour and 15 minutes and will provide an overview of general economic, operator and materials pricing trends, historical E&S pricing trends from AutoQuotes Inc., and the magazine's hard number forecasts of nine separate E&S product categories for both '09 and '10, as well as overall industry forecasts for '11 through '13.

All participants will also receive an updated version of the entire six-section forecast in PowerPoint format, including an overview of the Top 150 E&S manufacturers from Muldowney.

The seminar fee is $349. Those who have attended the FER forecast or other FER meetings, or have purchased the forecast in the past, will receive a discount. Those who attended the forecast seminar in August this year can attend the seminar and receive the updates for no charge.

If you can't wait until November, the current forecast package, presented at the magazine's annual forecast seminar Aug. 5, is available in six PowerPoint decks for $449. To order or for information on participating in the forecast webinar, e-mail Robin Ashton at rashton@fermag.com or Chris Palmer at cpalmer@fermag.com, or call the magazine at 800/986-9616.